Fail Forward: Turning Real Estate Setbacks into Stepping Stones

Hey there, Rick Melero here. Throughout my journey in real estate, I've learned that failure isn't just inevitable - it's essential. Today, I want to share with you the power of failing forward and how it can transform your real estate career.

The Importance of Embracing Failure

In real estate, as in life, failures are going to happen. It's not a question of if, but when. The key is how you respond to these setbacks. Do you let them defeat you, or do you use them as stepping stones to greater success?

Failing forward is about more than just bouncing back. It's about learning, growing, and becoming stronger with each setback. It's about using failures as fuel for your future success.

Here's why embracing failure is so important:

1. It's the best teacher: Failures provide lessons that success simply can't teach.

2. It builds resilience: Each failure you overcome makes you stronger and more prepared for future challenges.

3. It leads to innovation: Often, our biggest breakthroughs come from our biggest failures.

4. It keeps you humble: Failure reminds us that we're human and helps us stay grounded.

Remember, every successful real estate investor has faced failures. What sets them apart is their ability to learn from these setbacks and keep moving forward.

My Biggest Real Estate Mistakes and Lessons

Let me share a couple of my own failures and what I learned from them:

The Burnt House Disaster

One of my most embarrassing failures happened when I was on a cruise. A team member called about a great deal - a mortgage in foreclosure available at just $15k with a face value of $110k. It seemed too good to be true, but I was in a rush and told them to go ahead if everything checked out.

When I got back, I discovered the house was severely fire-damaged. My team member hadn't properly inspected the property because it was raining and he didn't want to get his white shoes muddy. To make matters worse, we later found out there were issues with the chain of title, and we didn't even legally own the mortgage.

Lessons Learned:

• Never rush into a deal without proper due diligence.

• Always inspect properties thoroughly, regardless of weather conditions.

• Double-check all legal aspects of a deal, especially with distressed properties.

The Overconfident Wholesaler

Early in my career, I hired a wholesaler named Chouffon to find me a property for my first investment deal. He found a foreclosure property that seemed like a great deal. However, Chouffon had severely miscalculated the repair estimates. The roof needed replacing, the floors were rotted, and we discovered the property was in a historic district, requiring costly restorations.

To make matters worse, I later found out Chouffon was profiting from the misjudgment by partnering with the rehab crew and receiving kickbacks.

Lessons Learned:

• Always verify repair estimates independently.

• Be cautious of deals that seem too good to be true.

• Thoroughly vet anyone you're working with in a deal.

Strategies for Learning from Setbacks

Failing forward isn't just about experiencing failure - it's about extracting maximum value from these experiences. Here are some strategies I use to learn from setbacks:

1. Take Ownership: The first step is to take full responsibility for the failure. Even if external factors contributed, focus on what you could have done differently.

2. Analyze What Went Wrong: Once the dust settles, do a thorough post-mortem. What factors contributed to the failure? Where were the weak points in your process?

3. Identify the Lessons: For every failure, there are multiple lessons. Make a list of everything you've learned from the experience.

4. Implement Changes: Use these lessons to improve your processes and decision-making for future deals.

5. Share Your Experience: Don't keep your failures to yourself. Share them with your team or other investors. This not only helps others avoid similar mistakes but also reinforces the lessons for you.

6. Stay Positive: Remember, failure is not a reflection of your worth as an investor. It's simply a stepping stone on your path to success.

Building Resilience as an Investor

Resilience is your ability to bounce back from setbacks. It's a crucial trait for any real estate investor. Here's how you can build your resilience:

1. Cultivate a Growth Mindset: Believe that your abilities can be developed through dedication and hard work. This mindset helps you see failures as opportunities for growth rather than indictments of your abilities.

2. Set Realistic Expectations: Understand that setbacks are a normal part of the real estate journey. Expecting some failures can help you handle them better when they occur.

3. Build a Strong Support Network: Surround yourself with people who support and encourage you. Having a strong network can provide emotional support and practical help during tough times.

4. Practice Self-Care: Invest in your physical and mental health. Regular exercise, good nutrition, and stress-management techniques can help you stay resilient in the face of challenges.

5. Celebrate Small Wins: Don't just focus on the big picture. Celebrate small victories along the way to keep your motivation high.

6. Learn from Others: Study how successful investors have overcome their own failures. Their stories can provide inspiration and practical strategies for bouncing back.

Remember, resilience is like a muscle - the more you use it, the stronger it gets. Each setback you overcome makes you better equipped to handle future challenges.

The Power of "Go Make a Mess"

One philosophy we've adopted at HIS Capital is "It's time to go make a mess!" This might sound counterintuitive, but it's actually a powerful approach to learning and growth.

The idea is to give yourself permission to try new things, even if you're not sure how they'll turn out. By embracing the possibility of "making a mess," you remove the fear of failure that often holds people back.

For example, when we train new salespeople, we tell them to memorize the script and then call a hundred people. We expect them to "screw up a lot." This approach allows them to learn from real experiences and improve quickly.

Conclusion

Failing forward is not just about bouncing back from failure - it's about using every setback as a launchpad for future success. By embracing failure, learning from your mistakes, and building resilience, you can turn obstacles into opportunities in your real estate journey.

Remember, every successful real estate investor has a story of failure behind them. What sets them apart is their ability to learn, grow, and keep moving forward. So the next time you face a setback, don't get discouraged. Instead, ask yourself, "What can I learn from this? How can I use this experience to become a better investor?"

Now, I challenge you: Go out there and make some messes. Take calculated risks, learn from your failures, and keep pushing forward. That's how you'll truly succeed in real estate.